ELLENVILLE – Illustrating a stark contrast from the mob scene at last week's public hearing on Walmart, only 11 people made their way to the first floor court room in the Government Center this Monday, where the village board held a public hearing to discuss a May 1 referendum to draw down from the $4.5 million "Mountain Money" fund to pay off the government's $1.1 million deficit.

The deficit's origins have been pinned mostly on a questionable budgeting practice the village employed, wherein unsold properties — such as the former village hall, the Hunt Memorial building, and various parking lots around the village — were included as anticipated revenues leading to the village unavoidably overspending its budget. If the referendum were approved by village voters, the funding to pay off the deficit would come from the $4.5 million fund gained from the 1997 sale of the Sam's Point Dwarf Pine Ridge Preserve to the Open Space Institute, hence the name "Mountain Money."

The deficit, which has been carried over from budget to budget for the past two years, has continued to grow despite hopes that possible revenue surpluses would contribute toward shrinking the deficit. An 18-month deficit-reduction plan was described by former Village Manager Elliott Auerbach while the village board was finalizing their budget last year.

But, Mayor Jeff Kaplan described where the plan went awry: namely, two more budgetary gaffes which have left the village once again without cash.

"There was an error in the amount of income that was going to be needed to pay off some of our debt-load," he said, referring to misplaced decimal points that went into the approved budget in April of 2008, leaving the village with a combined shortfall of $112,000.

Kaplan also described the other budget mistake which dashed the village's hopes for paying down the deficit: FEMA funding of $173,000 to repair Wintish Road was put into the budget as a revenue-item because it was thought that the project could be performed in-house by the village's street department. However, it was later discovered that the project was too big and had to be contracted out, meaning the village had spent $173,000 it shouldn't have.

Mayor Kaplan acknowledged that the information being presented regarding the exact $1.1 million figure was incomplete, saying that they would provide precise numbers to the public in the coming weeks leading up to the referendum in May. He also spoke to the need for the public to be assured that the village not accrue another deficit in the 2009-2010 fiscal year.

"The concern I have is not just how we got to $1.1 million, but that now we go to the expense side — what this board does in assessing this budget….We have to significantly reduce expenses….Quite frankly, us going to our department heads and asking them to give us their budget is not working. We have to do some drastic measures to get this budget under control and expenses down."

To that end, Mayor Kaplan unveiled a 10-point spending reduction plan (see sidebar) that he proposed. He also asked that the other board members — as well as members of the public — offer their own proposals for ways for the village to cut spending.

The few village residents who came to the hearing seemed unconvinced, expressing their disappointment with the village's heretofore spending practices. Wawarsing Town Clerk and village resident Jane Eck told the village board why, as of that night, she was not willing to authorize the withdrawal of the Mountain Money.

"I'd like to commend you on your ten items that you have there, because it's very essential that the Village of Ellenville change their spending habits. They've not been prudent with their money, and with Mrs. Sheeley at the helm as acting village manager, I think this can work… I'm against using the money, because what's going to stop you, two years down the road, from being in the same fix, and having to use the money again?"

Eck also said that drawing down from the fund would reduce the amount of yearly interest it generates — 75 percent of which is put into the general fund each year.

Other residents expressed similar reservations. School board member Iris Fridman said she would not be willing to vote 'yes' on the referendum until New York State comptroller had conducted an audit of the village's bookkeeping practices, something which was discussed last year. Trustee Patty Steinhoff explained that she, too, had been looking forward to the state's proposed audit, and was disappointed when their promise that the audit would happen "soon" wound up not being scheduled until this June. It was pointed out that waiting until the audit would go past the village's budget deadline of May 1, and would start the fiscal year out on June 1 with the deficit carried over, skewing the numbers for another year.

"Nobody in the world can set a budget with this deficit," said Kaplan.

Throughout the evening, most of those in attendance also expressed their skepticism about the village's promises to keep a balanced budget should the referendum go through. Wawarsing Town Councilmember Terry Houck — not a village resident — asked that hard numbers be attached to the mayor's proposed spending-reduction plan. The mayor promised that in the weeks to come, specific information about the deficit and how it came to be would be provided to the public. Village Trustee Francisco Oliveras, who is a member of the village's audit committee along with Trustee Steinhoff, suggested that the village's budget documents be put on the website for the public to see.

At the end of the meeting, the village board set public hearings on the subject at each village board meeting, to be held at 7:15 p.m. on the second and fourth Monday of each month until the referendum.

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